Pet medical care is the second largest market segment in the pet industry, accounting for almost 25%, second only to pet food.
The pet hospital is only a sub-industry of the pet medical sub-industry. The other two sub-industries are pet drugs and pet vaccines.
Domestic pet hospitals are mainly individual and private, and the quality and level of service vary between good and bad.
According to statistics, there are more than 12,000 pet hospitals in China, but non-chain hospitals account for nearly 90% of them.
From the perspective of investment scale, the scale of investment in the construction of domestic pet hospitals is also mainly small and medium-sized. 76.3% of pet hospitals have a construction scale of less than 2 million, of which 43.8% are less than 1 million;
Only 3.2% of pet hospitals have an investment scale of over RMB 10 million;
Only 6.69% have investment scales between 5 million and 9.99 million.
In other words, "big hospitals" with investments of more than 5 million only account for 10% of all pet hospitals, approximately 1,200, and most of them are chain pet hospitals.
The main competitors of Pet Pet Hospital are these 1,200 large pet hospitals.
In fact, it should be about 1,100, because Pet Pet Hospital has also opened about 100 pet hospitals in first- and second-tier cities.
The investment specifications are very high. First-tier cities and key second-tier cities are all large hospitals with investment of more than 10 million;
In weak second-tier cities, invest between 5 million and 10 million to open smaller hospitals.
This is also based on science. Large cities have a large population and have more pets. With a developed economy, pet owners are willing to spend more on their pets.
As for third- and fourth-tier cities, they are basically the territory of some small hospitals.
Pate Pet Hospital cannot sink because it cannot reflect the scale effect. This is the real economy, and input and output issues must be considered.
The most important thing is that at present, the main competitors of Pet Pet Hospital: Ruipeng, Ruipai, and An'an, the three pet hospital chain stores, all have opened more than 100 to more than 300 stores, and they are all centered around
Open in first and second tier cities.
The fighting was very fierce, and Pate Pet Hospital and these opponents often stood next to each other and fought hand-to-hand.
Fortunately, Pate Pet Hospital can obtain online traffic from Pate.com, Touronghui, DouShi, and Magnesium Tuan.
Although the number of hospitals is slightly smaller than those of these three pet chain institutions, the output of a single store is much higher than that of several competitors.
Large pet hospitals can afford higher wages and better pet doctors. Once the scale effect is formed, the scattered small pet hospitals in third- and fourth-tier cities will basically rely on word of mouth.
Therefore, the battle for the leading pet hospital in China will be decided in first- and second-tier cities.
In addition to thinking of ways online, Zhang Yida also has ideas upstream and downstream of the industrial chain.
He has a bet with Zhang Sanshi of Gaoling Capital. The bet is to see who will control more pet industry assets three years later, that is, in June 2019.
Whoever has more assets will acquire the other company.
There is also an investment cap of US$1 billion, and the competition is about which of the two parties has a smarter layout of the pet industry and is better at running it.
If Zhang Yida's side is stronger, Gaoling Capital will naturally accept the merger and become a shareholder of Pate Holdings.
After all, Gaoling Capital is all about finance. Whether it is financial investment or running its own business, the ultimate goal is to make money.
Three years later, the two sides merged and avoided a losing battle.
I have to say that boss Zhang Sanshi is a very smart financier. No matter whether he wins or loses the bet, he will not suffer any loss.
Zhang Yida is different. In his previous life, he was engaged in the pet industry, and his father also wanted to make a big splash in this industry. Naturally, the two fathers and sons were not willing to be financial shareholders.
Pate Pet Hospital started a little slower than several of its competitors, and has been doing its best to expand. In the past two years, it has only opened about 100 pet hospitals.
It's not that funds are tight, after all, you can get loans, but it's limited by talent pool and industry awareness.
After nearly two years of exploration and laying the foundation, Pate Holding Group has basically figured out all the ins and outs of the industry.
After discussing with his father, Zhang Yida decided to take a two-pronged approach, one to increase the hospital's expansion speed, and the other to get involved in the upstream and downstream pet medical industry chain.
Professional pet hospitals carry out full industry chain services such as pet disease diagnosis and treatment, prevention and treatment, pet health care, pet grooming, etc., and bundle the sales of pet food and pet health care products.
Achieve scale effect, form a unified operation and standardized management model, and accelerate the improvement of brand effect.
Pet food is produced by Dogfud, a subsidiary of Pet Holdings that holds a 51% stake, but Pet Holdings has little to say about its layout in the two major segments of pet vaccines and pet drugs.
Although Pate Holding Group established a joint venture with Jingda Pharmaceutical Co., Ltd., a subsidiary of Jingda Medical Group, to enter the research and development of pet drugs, it was unable to produce any successful products for a while.
Domestic pet medicine has no special laws and regulations, and there is a regulatory gap, so the market is very chaotic.
It has become a common practice for domestic veterinary drug companies to imitate the pharmaceutical products of famous foreign animal health companies, so that consumers cannot understand the ingredients, or do not indicate the ingredients. The address may be left, but you cannot find it on the map... There are countless similar examples.
There are also veterinarians who use human medicine as medicine for pets. Some human medicine can be used on pets, but some cannot.
If you make a mistake, the dog's life may be at risk. Pet hospitals often cause doctor-patient disputes.
Domestic pet drug companies have always been in this "small, weak, scattered, and gray" state, and there are very few companies that specialize in the production of pet drugs.
Moreover, the pet drugs produced are highly homogeneous, highly imitate each other, and have weak market competitiveness, making it difficult for enterprises to obtain economies of scale.
Without good benefits, we cannot afford the costs and risks of developing innovative drugs.
In addition, there is a lack of professional talents in the country, and the research and development capabilities of new pet drugs are obviously insufficient, which hinders the research and development and innovation of pet drugs.
As more and more people keep pets in China, the demand for new pet drugs is increasing day by day, and the supply exceeds demand, which in turn has further led to a large number of domestic veterinary drug companies copying foreign pet drugs.
If things go on like this, the production and research and development of domestic pet drugs will enter a vicious cycle.
Zhang Qinghua felt this and decided to visit a famous foreign animal protection company and learn from it.
Pfizer's Zoetis, the world's largest manufacturer of pet and livestock drugs and vaccinations, the world's Fortune 500 company Eli Lilly and Company's animal health brand Eli Lilly Animal Health, Bayer's animal health brand... and other big companies, he
Went to them all.
Unfortunately, these companies are very large and have branches and production plants in China, so they are unwilling to sell their mainstream products to Pate Holdings.
This is a bit tricky!
Zhang Qinghua had no choice but to change his thinking and turn agency into inspection to understand their R&D, production and sales processes.
The people from these companies are still very considerate, because Pet.com and Pet Pet Hospital are their important sales partners in China.
They took Zhang Qinghua and his party to visit the laboratory and production workshop, and arranged for someone to provide explanations.
People are not afraid of stealing from others at all, because they are very confident in the technology, even if you make generic drugs.
After some investigation, Zhang Qinghua gained a lot of insights.
After returning to New York, he began to vividly tell his son about this experience.
"Take Zoetis for example. In its third quarter financial report of 2017, revenue was US$1.35 billion and net profit was US$298 million.
There are 25 factories and 300 production lines around the world, and our products are exported to more than 100 countries.
There is also a R&D team of thousands of people, all of whom are senior talents.
This company entered China very early, setting up an office in Beijing in 1995.
Now the Asia-Pacific headquarters is in Shanghai, there is a R&D center in Beijing, and there are production plants in Jilin Province and Xuzhou..."
Zhang Yida nodded with a smile. He couldn't understand what his father said. After all, this was what he did in his previous life.
Zoetis is not well-known, but its parent company Pfizer is very famous. The company that produces Viagra has a history of nearly 170 years.
Pfizer was founded in New York in 1849, when China was still in the reign of Daoguang...
Therefore, in the field of biopharmaceuticals, Chinese companies still have a long way to go.
Zhang Yida was not surprised at all when he heard his father say that he had not obtained the agency qualification.
Foreign devils are so smart. The money they can earn by themselves will never be given to you, the Chinese.
"I heard that Bayer is interested in selling its animal health business?"
Zhang Qinghua smiled and said: "Yes, the person in charge of their American branch heard that I have a son worth 70 billion US dollars, and he tried his best to promote their company to me."
Zhang Yida scratched his head and asked, "How much is the quotation? Is it 10 billion US dollars?"
Zhang Qinghua glanced at his son in surprise, "Yes, how do you know? They asked for 10 billion US dollars."
Zhang Yida replied casually: "I guessed it."
In fact, this is not a guess. In the past 19 years, Eli Lilly Animal Health acquired the Bayer Animal Health division with US$5.3 billion in cash and US$2.3 billion in stock.
Zhang Yida is engaged in this industry, and of course he remembers this largest merger and acquisition transaction in the pet medical market in recent years.
The transaction price is not high. The net profit of Bayer's animal health business that year was just over US$400 million, and the valuation of the price-to-earnings ratio of 18.8 times is completely reasonable.
Zhang Yida was really tempted at this moment.
"When I heard the quotation, I didn't dare to discuss it further."
Zhang Qinghua smiled and said, "How much is the valuation of our Pate Holding Group? She Tunxiang?"
Zhang Yida said silently, the pet market is a rising industry. If we swallow up Bayer's animal health business, and with the help of the sales network of Pet.com and Dogfud, we will definitely have great potential!
Seeing that his son was silent, Zhang Qinghua asked: "You're not really thinking about acquiring Bayer's animal health business, are you?"
"I think it can be acquired. In this way, the business sectors of our pet market will be complete. Pet e-commerce, food, hospitals, medicines and other puzzle pieces will form a pet industry kingdom.
Moreover, the acquisition of Bayer's animal health business can also expand our business network overseas.
In the future, Pet.com and Dogford pet food can develop overseas!"
Zhang Qinghua has inspected so many pet pharmaceutical companies and is very envious of them.
It would be great if we could acquire it and turn it into our own property, but the problem is that we can’t afford it?
"Can you get 10 billion U.S. dollars? Most of your wealth is in stocks of unlisted companies. Are you going to get a loan?"
Zhang Yida nodded, "We definitely need to use financial leverage, and we don't need so many shares. We just need a controlling stake. We can also bring in a few partners, but the actual investment won't be much."
Zhang Qinghua always feels that it is not appropriate for a company with a valuation of more than one billion US dollars to acquire a company with a valuation of tens of billions of US dollars. This is a big step.
"How about waiting for another two years until Pate Holdings becomes stronger."
Zhang Qinghua advised, "Besides, the pet hospital war in your country has not yet been settled. Isn't this a way to spread your energy around and give everyone a chance to defeat them?"
Zhang Yida did not agree with his father's point of view and explained: "There is no longer a missed opportunity, and the opportunity to encounter the world's top five animal health companies for sale is very rare.
If we take over Bayer's animal health business, the industrial chain will be complete. This opportunity cannot be missed under any circumstances.
As for domestic pet hospitals, one merger and acquisition operation will end the war."
Zhang Qinghua felt helpless and relieved when he saw his high-spirited son.
Unfortunately, he feels that he is increasingly unable to keep up with his son. Ten-billion-dollar mergers and acquisitions are such an understatement in his eyes.
I am gratified that my son's achievements far exceed his own, and his climb in the business field is close to the top of the world.
Thinking of this, he no longer objected, but repeatedly warned that such a sky-high price acquisition should be treated with caution.